Note: In observance of the Labor Day Holiday, the Markets will be closed Monday.
Thursday's Weekly Export Sales Report showed 938 t.m.t. of corn was sold last week, off from 972 the week prior but key Asian sales that account for three-quarters of our exportable course grain exports yearly- were up for the third consecutive week at 472 t.m.t. Asian Markets continue to be good buyers in the low 3.00 area. Asia continues to buy feed for expanding chicken and hog population on expanding protein policies. While china builds corn reserves, selling less corn to surrounding Asian neighbors. Demand though good- is not enough to drive prices with harvest to begin this month. It will surface as a supporting fundamental after harvest. Soy bean export sales came in at 1.107 m.m.t. off from a two year high of 2.054 the week prior with china in for 447 t.m.t. of the total. China continues to be a very aggressive buyer of beans as the new marketing year begins. There is no reason to believe their demand will slow through year's end as drought there is expanding. While a secondary producer and exporter to China, Argentina, beginnings planting of their new bean crop with year's long drought like conditions. China needs to insure their mandate for increased protein needs by overlooking beans from the U.S. until at least February, when South American crop production comes to light. The wheat export sales this week were a poor 405 t.m.t. down 38% from the week prior and 21% under a weak four week average. The demand outlook remains simple: As long as we sit on near record ending stocks here and on world ports, millers and end users will continue to buy hand to mouth only as needed and avoid the costs of storing quantity.
Summary on Demand: Corn remains good but not a price driving force until harvest is over as stacks on hand are ample and production fundamentals remain our pricing force through month's end.
Bean demand should be expected to remain strong through year's end, while wheat demand remains weak until possibly a production problem arises out of the U.S. or other big producers bringing in value buying on an expected production problem rally.
The condition of our crops was addressed on Monday's Crop Progress reports. The corn condition at 69% good to excellent condition is 13% over our 10 year average and last year's 61% G-E rating. This will have private crop casters projecting record yields. Beans also at 69% G-E condition were 15% over our 10 year average and last year's 57% G-E. This too will lead analysts to project a record yield as it's in only 2% under our highest rating in 1992. This is all good unless an early frost or freeze occurs before we exit corn's dough stage and beans pod setting stage by month's end. The break in prices this week came as weather gurus all projected warmer conditions through September 15th but a jet stream can buckle overnight and forecasts turn threatening quickly. Today the weather site WXRISK.COM noted the weather model known as the 12Z GFS flipped over and is now suggesting a major cold front will come down September 17th to the 19th and possibly bring a crop killing frost to the entire Midwest Grain Belt. This model could reverse this tomorrow but be aware that a frost scare along could see corn and beans post a sharp rally when funds cover shorts and buy long a weather premium back into the Market.
Conditions Summary: If we survive a frost damaging crop event of any reasonable measure we should expect record corn and near record bean yields. This crop size is made or lost the next three weeks.
Near term trend next week is largely the markets getting positions squared up ahead of the Friday, September 11th USDA Monthly Crop Report. We should expect short covering initially as the shorts have all the profits therefore the risk. Traders should expect a Bearish Corn Report, but traders will expect a Bullish Bean Report; as recent big Chinese buying could lead to a cut in bean ending stocks- so expect a rally off recent lows into the report with corn in tow as traders will not sell corn if they think beans could pull it up. December corn has support at 3.10, buy long and hold unless a close under 3.10 occurs. The November beans have support at 9.20, but long with stops on a close under 9.20. A note on our longer term outlook that I will talk more about on next week's report. If the crop report on September 11th is void of any Bullish surprises and we avoid a crop damaging frost the next three weeks we should expect another leg down on prices into month's end and before October 10th. November beans could see 8.10 to 8.30 and December corn 2.60 to 2.70- Of course it is all dependent on the report and the weather.